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The likely sale ofMariaDB to K1 Investment Management for $ 37 millionis a capstone on the failed epoch of SPAC uniting thatgained prominence for a abbreviated timein venture circles during the last inauguration boom .
call up SPACs ? Special aim learning company , also known as blank - halt companies , were used intemperately in 2021 and 2022 to take a number of venture - back up inauguration public . The unnumerable combinations generatedlawsuits , bankruptcy , and agreat sum of deleted shareowner wealthiness .
And while some companies that took this shortcut to the public markets were wondering , others were more serious businesses — MariaDB was one such society .
After raisingnine figure over a X , MariaDB said it had closed a $ 104 million Series D roundalongsidea merger with Angel Pond Holdings , a SPAC . In itsinitial pitch , MariaDB say its equity valuation after the merger would be $ 973.6 million , with an enterprise value of $ 672.1 million — the difference in valuations here was attributed to a gravid fundraising event that would follow as part of the proposed SPAC deal .
However , by the time the fusion was closed , much of the SPAC hard cash was nowhere to be found . Some 99 % of the portion held in Angel Pond wereredeemed at $ 10 per share , removing $ 263 million from the deal ’s note value . The investor who chose to sell their shares in this way did good than anyone who stay around , because MariaDB ’s stocktanked sharplyduring its first 24-hour interval as a public company . Today , MariaDB ’s stock trades at $ 0.36 per share , which is somewhat better than its 52 - hebdomad low of $ 0.16 per parcel on February 2 .
Modest rally aside , MariaDB has not subsist up to its investors ’ expectations . In itsSPAC pitch , the company forecast its one-year recur taxation ( ARR ) to reach $ 53 million in FY 2022 , and $ 72 million in FY 2023 . It also expect taxation of $ 47 million in FY 2022 and $ 64 million in FY 2023 .
But the company was an intact yr behind its projected growth curve ball , reporting revenue of $ 53.1 million and ARR of $ 50.3 million in 2023 . In thefirst quartern of FY 2024 , MariaDB reported revenue of $ 13.6 million , up from $ 12.8 million a year ago . In improver to that modest improvement in top line , MariaDB also managed to more than halve its operating passing to $ 5.6 million and narrowed its net going to $ 8.9 million from $ 12.8 million a class earlier . More significantly , the companionship dramatically boil down its cash wasting disease . And in the same quarter , its operating hard currency deficit amend to $ 1.4 million from $ 14.1 million .
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But these improvements seemed to fall a trivial too late : The combined effect of receipts increasing lento and rapidly emptying coffer meant that MariaDB could n’t go much longer without raising more money . It fix sense , then , that thecompany issueda “ fourth-year secured promissory note ” to RP Ventures deserving $ 26.5 million last October . That funding was usedto satisfy the ending of a full term loanwith the European Investment Bank . But the fellowship went into rift of its saving loan and now find its alternative are circumscribed .
That situation makes K1 ’s offer all the more interesting , since the terms of the RP note were percipient regarding the limitations it mark on the company . presumptively , K1 expects RP to clear up a likely purchase of MariaDB .
MariaDB wrap up go public while unprofitable , but without as much fuel as it might have hop for . For any inauguration , this nation of result is pretty much a tough - shell scenario : You go public ( more scrutiny ) while lose money ( hard cash reliant ) against circumscribed military reserve ( hard currency correspondence ) , coupled with a slowdown in the industry and a suddenly conservative valuation climate . You lift up cash - pitiable and without much equity note value to bewilder around . investor send your percentage price to effectively zero , and the economic value of all those years of employment and rough $ 50 million in annualized revenues becomes nil .
MariaDB makes for a two - part object lesson . First , it ’s a reminder of the ebullience that led to SPAC deal that were , in retrospect , too expensive and badly timed . Second , it show that not all software companies that reach low scale , say annualized tax income of $ 25 million , are going to keep acquire at a sufficient pace to sustain as a public company .
Beware exotic deals in heady times , and never count your future ARR growth as certain — even if you strain vital growth thresholds .
